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The bernanke rise is just about ready to fade
jdimmick
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I am under the impression that the bernanke rise that occured on monday is just about too fade away, if not wed/thur, then by weeks end. i feel a sizeable correction looming!
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Knowledge is the enemy of fear
<< <i>Are you talking about gold? >>
It seems gold and silver rises and falls in tandem.
Worry is the interest you pay on a debt you may not owe.
Give Me Liberty or Give Me Debt
even though relatively small, was expected. It came on fairly light volume as well. Tomorrow still might have some after effects. And then end of quarter reshuffling in the
stock markets by Thurs/Friday could have an effect. I'd sort of expect a rally in gold to continue towards the end of the week or start of next week.
Gold's sentiment is in the toilet and has been for weeks. It just came out of deeply oversold conditions...especially with the miners. This isn't usually the type of starting
point where big corrections occur....but rather where rallies begin from. The $1628 low we saw last week was probably the bottom for March/April. If that's the case then
we've completed the first 2 legs in gold's recovery from the December $1523 bottom....time for another leg up.
Knowledge is the enemy of fear
Consider MoneyLA. His idea of a bold move on his convictions that gold was going higher was 5% of his portfolio. Nevermind that the other 95% might get killed in the process.
I knew it would happen.
. . . patiently awaiting.
Give Me Liberty or Give Me Debt
<< <i>Just because a survey calls gold everyone's favorite investment, it doesn't mean that everyone is investing in gold. If that were true, we'd be seeing gold at much, much higher levels. Sentiment isn't the same as conviction or action.
Consider MoneyLA. His idea of a bold move on his convictions that gold was going higher was 5% of his portfolio. Nevermind that the other 95% might get killed in the process. >>
I think that everyone who can or wants to invest in gold has. While demand may not drop, the rate of demand has. This has major implications on price.
Knowledge is the enemy of fear
<< <i>Just saw some terrible bearish research on CNBC regarding gold.........it is EVERYONES favorite investment. Thats bad. The 2yr treasury could very well outperform gold. >>
How weird, I still have no friends or family who are invested in precious metals. Where are all these people hiding?
<< <i>Just saw some terrible bearish research on CNBC regarding gold.........it is EVERYONES favorite investment. Thats bad. The 2yr treasury could very well outperform gold. >>
"CNBC....bearish research?" Isn't that an oxymoron? Is anything coming from them properly researched and analyzed? Hopefully the source of this CNBC info is not Jeffrey
Christian of the CPM group....one of the biggest gold bear shills out there.
Gold is clearly not EVERYONE'S favorite investment. At least not here in the US, but maybe in India and North Korea, possibly China too. Difference with the Asian cultures is that
gold is real money and wealth....not necessarily an investment. Only one person I know outside of coin dealers (and this board) is invested in gold. It's probably 100-1 in the general
population if you disregard gold jewelry. Mention investing in gold in general company and you get the same glassy eyed responses as you did back in 2004-2006. The CNBC survey
questioned all of 800 people with 37% claiming gold was the best investment. I'd bet heavily that only a tiny fraction of those 37% actually own any gold coins or bars. People
with a gold class ring or 1 oz. necklace probably view that as their gold "investment." It's true that nearly "EVERY ADULT" owns some gold jewelry....doesn't mean they're invested in it.
These gold jewelry owners have seen the price of their jewelry rise for the past 10 yrs. Now let's see them go out and discover that 18K jewelry that initially had a 200% premium when
they bought it, isn't worth that.
The Chinese central bank alone would like to add 5,000+ tonnes of gold to its coffers to be able to compete with the US down the road. And that doesn't include what the Chinese
people themselves are buying. It's unlikely that the "research" by CNBC included central bank demand, especially hidden demand that won't be reported for years after the fact.
The GFMS surveys don't include CB buying either. I guess "real" gold demand comes from private buyers and corporations.
Saying today that everyone who wants to invest in gold already has would be somewhat similar to stating the same thing back in 1973-1974. At least from chart comparisons that's a
roughly equivalent period to today. Or worst case we'd be looking at 1978. Clearly, lots more buyers came into the picture from 1975-1980 and 1978-1980. If all buyers were currently
done then the gold price would be in full collapse mode a la 1980-1982. But one then wonders when the "mania" peak occurred because I must have missed it. Final gold demand and
price tends to rebalance a nation's sovereign debt. And so far we're nowhere near that point.
When I say everyone, I mean everyone who could invest in gold. Surely the burger flipper at MCD or bagger at the grocery store or your local mechanic dont own gold. Never will and most likely have no interest.
The housing market peaked when 65-70% of the people owned it. The stock market peaked in 2000 at about 65% ownership. Gold is a TINY MARKET compared to stocks or real estate so its saturation level is MUCH LOWER than either.
I never said all interested buyers were done buying. I am saying the rate of demand is changing and probably not for the better. At $250/oz one could by 4 oz for a grand. Now that same investor cant even 3/4 oz. So while the dollar demand may continue, the quantity demand is slowing. Eventually, the miners will produce more than demanded and then you get the collapse. We are not there yet, and I didnt say we were, but it will come.
Knowledge is the enemy of fear
I expect the big boyz to talk about it because for them it's probably a sure-fire trade if they have a direct line the JPM trading desk. More than likely, they get info'd
via JPM so they can join in on each and every crash. Considering gold's role as a canary in the coal mine it probably gets talked about every day in every significant
financial and monetary circle around the world. Therefore, the "effective" management of its price is crucial in monetary policy. Some of those investment pros have
probably been touting it for 10 yrs now. There was nothing to be scared about back in 2003 at $400 gold.
I'll continue to keep my money on the central banks (and people) of China, India, Russia, N&S Korea, Saudi Arabia, and Turkey to keep a bid under gold. China would buy the
next 3 years of world gold production at today's prices if they knew they could get it w/o competition. That would be $425 BILL less in fiat currencies and bonds they'd have to
carry in their $TRILLIONs of reserves. Those 7 nations will be joined by many others once it becomes more obvious what is happening to fiat currencies and sovereign debts.
The longer term buying rate of gold is proportional to the world's debt increases. I don't see that shrinking any time soon.
And I agree. I dont think they let it drop below $1250.
Knowledge is the enemy of fear
I never said all interested buyers were done buying.
Isn't that exactly the point? It's a small enough market that a few trillion bucks here and there is enough to guarantee that gold prices can go anywhere. Up, or down - depending on who has a dog in this fight.
The markets are pretty much a sham. You go with your gut and your intellect. My intellect tells me that the move is toward honest money, and my gut tells me that people are fed up with the game.
I knew it would happen.
that the price can't break down. I'm buying dips and am thinking that the bull move resumes by July/August, after 12 months of this consolidation. JMHO.
<< <i>
I never said all interested buyers were done buying. I am saying the rate of demand is changing and probably not for the better. At $250/oz one could by 4 oz for a grand. Now that same investor cant even 3/4 oz. So while the dollar demand may continue, the quantity demand is slowing. Eventually, the miners will produce more than demanded and then you get the collapse. We are not there yet, and I didnt say we were, but it will come. >>
You seem to forget that quite a few people (an entire nation) pushed their euphoria to a point of $28,000.00 for ONE Tulip Bulb-and then it crashed.
So if I see Gold at $20,000.00 an ounce I'll think that we are getting close to the end of one great euphoric ride. All I'm saying is, that it is possible that we have a long way to go before Gold peaks. Mans ability to go euphoric is well proven and Gold is one item that still holds a deep allure in many ways.
It always puzzled me why someone would tie tulip bulbs to PM's as an example. Unless they find the whole earth is full of gold and silver you can't create PM's. Now to me the tulip bulb is like fiat currencies they can recreate it (plant) to make more until the value is gone, much like the printing presses are doing to fiat currencies at present.
<< <i>You seem to forget that quite a few people (an entire nation) pushed their euphoria to a point of $28,000.00 for ONE Tulip Bulb-and then it crashed. So if I see Gold at $20,000.00 an ounce I'll think that we are getting close to the end of one great euphoric ride. All I'm saying is, that it is possible that we have a long way to go before Gold peaks. Mans ability to go euphoric is well proven and Gold is one item that still holds a deep allure in many ways
It always puzzled me why someone would tie tulip bulbs to PM's as an example. Unless they find the whole earth is full of gold and silver you can't create PM's. Now to me the tulip bulb is like fiat currencies they can recreate it (plant) to make more until the value is gone, much like the printing presses are doing to fiat currencies at present. >>
No doubt, it's not an apples to apples comparison, but in many ways mining is "creating" gold, so gold supply is certainly not finite at this point in time. Gold is still a commodity that has basic supply and demand aspects like any commodity, just because it makes many men mental, not unlike a hot chick,
<< <i>Gold is a TINY MARKET compared to stocks or real estate so its saturation level is MUCH LOWER than either.
I never said all interested buyers were done buying.
Isn't that exactly the point? It's a small enough market that a few trillion bucks here and there is enough to guarantee that gold prices can go anywhere. Up, or down - depending on who has a dog in this fight.
The markets are pretty much a sham. You go with your gut and your intellect. My intellect tells me that the move is toward honest money, and my gut tells me that people are fed up with the game. >>
JMSKI,
At a certain price there NEEDS to be constant buying pressure just to maintain price. This buying pressure no longer pushes prices higher, but simply maintains the price. This is point that I have been trying to make. If you disagree, then it will become apparent to you after years of stagnant pricing in the face of "constant central bank buying". And "structural social demand" from India and China. You'll see.
Knowledge is the enemy of fear
<< <i>If gold were everyone's favorite investment it would be priced at $5k.
. . . patiently awaiting.
or more.....
If gold goes to $20,000 I think that the ride will have been anything but euphoric. It'd be euphoric afterwards, sure - but not during. Just my opinion.
I knew it would happen.
At a certain price there NEEDS to be constant buying pressure just to maintain price. This buying pressure no longer pushes prices higher, but simply maintains the price. This is point that I have been trying to make. If you disagree, then it will become apparent to you after years of stagnant pricing in the face of "constant central bank buying". And "structural social demand" from India and China. You'll see.
I don't disagree with what you said. I understand equilibriums.
What we are faced with right now is a Fed creating dollars to extinguish bad debt that was created by "friends of the Fed". Even the Fed doesn't know how much money they will have to create, how fast they will have to create it - or for how long they will have to continue the process.
The Problem, is that the Fed is creating New Debt to replace the Bad Debt. As taxpayers, WE are the ones on the hook for the New Debt. Never mind the fact that the unfunded liabilities are ballooning as well.
Gold is just an incidental market to this problem. The reason that other countries are stacking gold right now is for the same reason I do - it's insurance. But, it also is a barometer that blows the whistle on government money creation - and that is the only reason that the Central Banks hammer down the price of gold whenever it looks out of control.
Much of what we worry about is smoke. Many times, we are betting on illusions, whether it's gold, stocks, bonds, or tulips. The illusion-creators decide. We don't. All you can do is try to stay in the game. I'll dump my gold if I get a whiff that it's not going to keep its relative value. If it takes a huge dive, the question will be - how is it doing on a relative basis? That's the only question, in my book.
As I just said in my previous comment - If gold goes to $20,000 I think that the ride will have been anything but euphoric. It'd be euphoric afterwards, sure - but not during. Just my opinion.
The people in charge of all these markets are not anyone's friends.
I knew it would happen.
<< <i>The Problem, is that the Fed is creating New Debt to replace the Bad Debt. As taxpayers, WE are the ones on the hook for the New Debt. Never mind the fact that the unfunded liabilities are ballooning as well. >>
All holders of dollars, not just taxpayers, are on the hook in terms of dollar destruction (loss of value) by the FED's actions.
Any runaway price in gold will indicate the FED has lost control of not only the economy but perception of the economy as well.
Student loan debt is about to create one giant economic fiasco. Hold on to your seats. If you don't have a seat, get one.
Give Me Liberty or Give Me Debt
I dont disagree, but nothing you wrote tells me gold is going higher in the next 2 years.
The era of discouragement is setting upon PM bulls.
Derryb writes of more de(dis)inflationary pressure about to come.
Edit----Hats off to the OP. Great call.
Knowledge is the enemy of fear
Derryb writes of more de(dis)inflationary pressure about to come.
I guess I'll have to pull a Bill Clinton here. It depends on what the meaning of "is" is. Again, my view is that even the Fed doesn't know what's going to be required, and even the Fed doesn't know what the fallout will be from their pumping, once they've pumped.
As derryb mentioned, and as Jim Sinclair points out regularly - it's about the perceptions of the economic realities. People's actions and attitudes determine where the economy is going, and the Fed simply tries to manipulate what businesses and individuals will do. They do it with monetary policy.
The more debt crushes people's finances, the less control the Fed will have.
Ergo, I don't really care if gold is in a bull market or not. I think it's my best bet against catastrophic Fed and Administration policies. To be sure, nothing is guaranteed.
Gosh, where is Bailey when we need some sunshine around here?
I knew it would happen.
<< <i>Looks Like I was wrong!! >>
We are seldom wrong - only early or late.
<< <i>JMSKI,
I dont disagree, but nothing you wrote tells me gold is going higher in the next 2 years.
The era of discouragement is setting upon PM bulls. >>
It boils down to what is going to happen to the value of the dollar and other major world currencies. Those of us that see continued debt, petrodollar attacks, dollar quantity increases and dollar value destruction see higher gold prices. I see nothing but encouragment for the gold bull trend, more so than ever. I'm even more bullish on silver. Hey, but that's just me. I've been wrong before, but I'm betting the bank on this.
Give Me Liberty or Give Me Debt
<< <i>Looks Like I was wrong!! >>
Too early yet to say, you still could be right in the near term and compared to many predictions around here, your prediction is barely scratched yet.
Valuations are still reasonable if there are earnings, it just looks like a very sluggish and spotty recovery, so even if the economy continues to "recover", some stocks will sink.
I try not to make predictions, and there is way too much correlation in assets to predict demise for one asset vs another right now, but I will always own more stocks than precious metals. and I like gold platinum and silver.
<< <i>I try not to make predictions, and there is way too much correlation in assets to predict demise for one asset vs another right now, but I will always own more stocks than precious metals. and I like gold platinum and silver. >>
sounds like a prediction that stocks will outperform metals. All investments are based on personal predictions whether kept private or shared with others.
Give Me Liberty or Give Me Debt
<< <i>No prediction, I'm just a capitalist and prefer in the long run, more of my money invested in assets that could produce jobs, goods, services, cures, treatments and economic benefits. >>
Sounds like you are saying that people that buy stocks have the moral high ground compared to people who buy PM's.
Worry is the interest you pay on a debt you may not owe.
Give Me Liberty or Give Me Debt
<< <i>I am under the impression that the bernanke rise that occured on monday is just about too fade away, if not wed/thur, then by weeks end. i feel a sizeable correction looming! >>
The first half of your call came to pass. As far the 2nd part, time will tell. I think we'll see $1700's next week, but maybe after yet another brief dip to the $1650's.
Gold's job is to balance the foreign debt every so often. It's not even close as of today. That's the only true supply and demand equation out there. Debt has to be repaid and gold is one of the few things than can adequately do it.
<< <i>Looks Like I was wrong!! >>
Wouldn't be the first time and most likely the last time. Successful Investors who get it right most of the time, would not be posting here, but be enjoying a fancy lifestyle in the Mediterranean.